Companies will be affected in a variety of ways by the receivership of Signature Bank, Silicon Valley Bank or any other similarly situated financial institution. Companies may face difficulty accessing bank facilities or the capital markets or limitations on money market or commercial paper facilities. Resulting liquidity constraints may entail difficult decisions, including prioritizing the uses of limited cash. The constituents of many companies may be affected, including employees, suppliers, lenders and customers. The effects will impact shareholders.
Companies must also be diligent in ensuring their continued compliance with federal securities laws. In light of increased market volatility and uncertainty following the receivership of Signature Bank and Silicon Valley Bank, Securities and Exchange Commission (SEC) Chair Gary Gensler gave a statement on March 12, 2023 that the SEC was “particularly focused on monitoring for market stability and identifying and prosecuting any form of misconduct that might threaten investors, capital formation, or the markets more broadly.”
Read the complete Legal Update.